Renewables get fewer subsidies and are cheaper than dirty energies, Commission’s study shows | WWF

Renewables get fewer subsidies and are cheaper than dirty energies, Commission’s study shows

Posted on
14 October 2014

Brussels, Belgium: Onshore wind power is cheaper than coal, gas or nuclear energy when ‘external’ costs such as air quality, human toxicity and climate change are taken into account, according to a Commission analysis.

The report , commissioned for the European Commission by Ecofys, shows that total direct energy subsidies1 in the EU in 2012 were estimated at €122 billion euros, with fossil fuels (coal and gas) and nuclear making up 36% (€43 billion euros) and renewables getting slightly less at 34% (€41 billion euros)2 . These figures show that renewables cost the taxpayer less than dirty energy alternatives. 
In addition, the report also calculates external costs of energy - costs which are not reflected in market prices, such as environmental and health impacts and the impact of climate change. When these external costs are added to subsidies, figures show that fossil fuels and nuclear make up 70% of the costs, while renewables make only 18%3.
Renewables are therefore cheaper than dirty energies, when overall costs are taken into account4 . For every megawatt hour (MW/h) of electricity generated, onshore wind power costs roughly €105 per MW/h, compared to gas and coal which can cost up to around €164 and €233 per MW/h, respectively.
Tony Long, Director of WWF European Policy Office, says: “The study usefully breaks the myth that renewables get more subsidies and are more expensive than dirty energies – when in fact it’s the other way around. It seems Member States have still got completely wrong subsidy schemes for energy despite their claims and obligations. They are backing the wrong horse. Renewables and energy efficiency are the answer, not more demand for polluting and expensive energies”.
“The picture is even worse when external costs of energy – paid by us taxpayers – are added: dirty energies represent 70% of the costs, compared to 18% for renewables. The study makes clear that renewables are cheaper and dirty energies are unaffordable when all costs are properly factored in, especially the cost of climate change5.
The report is timely as Europe prepares the ground for its energy and climate policy for the next decade. National leaders are due to agree the headlines of the EU 2030 climate and energy framework at a European Council meeting on 23 and 24 October. With key issues on the table such as energy independence and security, stability of supply, falling demand, and the urgent need to cut emissions and head off climate change, it seems like renewables and energy efficiency are the answer.
[1] The study, which focuses on power and heat, does not include the transport sector, where large fossil fuel subsidies occur according to the OECD.
[2] Including historic interventions and free allocations of carbon credits, as the study calculates.
[3] See figure from the Ecofys study
[4] LCOE (levelised cost of electricity) + subsidies + external costs
[5] The study calculates that climate change represents around 50% of the external costs, followed by resource depletion (22%) and particulate matter formation (15%). The remaining 13% of impacts include human toxicity, agricultural land occupation, water depletion, metal depletion, ecosystem toxicity, radiation, acidification and eutrophication.

For more information:
Alexandra Bennett
Communications Director
+32 477 393 400
Sébastien Godinot
+32 489 461 314 

Source of the article
Fossil Fuels
Ecofys graphic EU energy costs
© Ecofys